It’s Not About Moving to Cloud, It’s About Changing How IT Works

20 November 2019

Cloud by itself is not a silver bullet that will drive savings and productivity, make users happier, or make your company more agile. If you are migrating to cloud without a strategic plan for digital transformation, you are not likely to experience much success – and costs could very well spiral out of control.

In this blog, I’d like to explore how organizations can maximize the value of cloud by changing how they run IT.

Successful early cloud adopters have figured out they must manage IT differently to achieve the full promise of what cloud offers. Organizations that have yet to reap the benefits of cloud are still using traditional IT management frameworks that were biased towards large capital spends or building for longevity – thus lacking speed, agility and an organizational self-sufficiency philosophy up and down the technology services stack.

A joint effort between business + technology

It’s important to recognize that “digital transformation” using cloud is not just a shift in technology, but a move towards business outcome-based transformation.

Consider what today’s businesses are dealing with:

• Customers and suppliers who want to interact with an organization digitally, on any device, at any time, with an expectation for speedy fulfilment.
• Processes that require standardization and connectivity to remove the paper buffer and enhance quality.
• A growing volume of data available for capture and subsequent analysis that requires new skills and tools to exploit it.

The processes and technologies supporting these trends require:

• Speed to market and automatic scalability in response to demand.
• Agility and flexibility to interact with, and deliver, new capabilities regardless of where they are developed (APIs, microservices using containers, and open source development).
• Technologies and skills that vary widely and may not be readily available, resulting in most companies being unable to attain self-sufficiency.

In other words, what is needed are Agile development techniques, DevOps, a focus on a collaboration process that consists of “try, learn, improve, repeat” rather than endless analysis trying to build the perfect end solution – all combined with an improved level of partnership between business and IT.

Moving to the cloud is hard – and ignoring the soft stuff makes it harder

Given these trends, most organizations are changing how they run IT, supported by new operating models and the right skills within the organization to embrace business Integration, supplier management, operations management, business outcome focus and elasticity. They need engagements that will help transform how IT is managed – as much as what IT is managing. Roles will change, skill demands will increase, and many traditional activities will transition.

Here are two key business challenges to keep in mind when moving to cloud:

1. IT is now delivered “as a service.” Success is measured in outcomes and business results, which requires skills for managing and integrating services from multiple vendors into your existing operations. These are often new competencies within IT or present at a new scale.
2. Business and IT must work in sync. Business areas may acquire cloud services directly, yet lack the overall skill to address the security, compliance, recoverability and repatriation issues that can result. Collaboration and co-creation between business and IT, together with the discipline necessary for production, is necessary to realize the speed and agility of cloud.

Why “cloud first” requires a new operating model

A cloud-first strategy is designed to remove limitations that have crept into the organization’s business solutions by fundamentally changing the way IT works, in cooperation with the rest of the business. The Cloud Target Operating Model (CTOM) brings business and IT trends together in the context of management, providing an assessment of where an organization is and where they need to go, in order to effectively manage the transition and operations of new services, cloud amongst them. (See 7 key considerations for your CTOM, below.)

Based on a shared vision and strategic direction, the CTOM maps to the expected business benefits of cloud technology and results in a transformative business model across the organization — people, processes and technology. The CTOM combines experience-based design with cloud-based capabilities, and services and capabilities delivered via a cloud infrastructure offer the advantages of:

• Cloud industry standards from cloud providers that provide stable and predictable application development.
• Container-flexible modules that break applications into components and microservices that offer inherent flexibility.
• Continuous integration / continuous development.
• Compute and storage facilities that are consumed by IT as a service have security and standards built right in.

 

Building a cloud-first strategy: 5 steps to success

How can you ensure that your organization experiences all the benefits that cloud has to offer? I’d like to suggest five key steps.

1. IT and business areas must plan and work together.

With 80% of workloads still to be migrated to cloud – through renewal, rebuilding, retirement, redundancies — close collaboration and cooperation with the business is required to understand what’s possible and to build a plan. Acquiring a shared vision between IT and the business is essential to get those two gears in sync. A multi-year roadmap of business capabilities will influence what will happen to underlying applications to meet growing business needs. IT must be able to undertake technical work of application modernization while planning for the functionality the business unit needs in the meantime.

2. Application ownership must move from project-based perspective to product-based perspective.

Traditionally, IT managed features and budget. Spending on new features and applications was justified on a project basis using a cost-benefit analysis.  In a digital business, there is a budget for continuous innovation, and applications continually evolve. This is similar to the way products are developed, where ideas come up outside the original budget cycle and the application owner has the authority and incentive to change priorities. The more agility your business can have, the faster the business can move.

3. Changes to IT methodology and metrics will create new value.

With cloud provisioning delivered by service providers, IT management metrics become centred around agility and rate of change to support ‘fail fast, fix and do it better’ mentality. Agility and speed are the top priorities in a cloud-first model. Techniques like DevOps, and Site Reliability Engineering – where the focus is on creating new value and going live quickly – are changing the way we manage and deploy to production, encouraging tighter integration between the historically separate camps of Development versus Production Support.

Agile and DevOps are at the heart of the IBM Garage Method for Cloud. Garage is a way to start the culture change at a departmental or team level and to experience and experiment with the process. It is about continuous testing, continuous integration and continuous development to be sure that whatever you’ve got at any moment is ready to be deployed.

4. Internal governance must change.

Governance is about how we make decisions, and in the cloud space, governance applies from top to bottom in concert with architectural standards and the roadmap discussion of capabilities from the organization. Governance asks: Is the solution consistent with the architecture and a business need? How will this piece of the puzzle fit together? How does decision making change when you are operating at a faster speed with more implementations going into production, each of them incremental? What would the governance processes be over that?

5. Different skills and new financial management are needed.

With the shift to cloud, IT is no longer in the server management / operations business. Instead, they are managing, monitoring, and governing service providers according to agreements, SLAs, and contracts. This affects the skills and financial management required.

• Financial management: Financial management changes as you move from capital expenditure to operating expenditure with the additional complexity of consumption variability. An organization can become more agile with a cloud subscription model, but it also increases the need for proactive management. New monitoring skills are needed to prevent cloud spending from spiralling out of control.
• Change management for skills and processes. Change management is required, not only for the business processes inside IT department but the impact to people throughout the organization. With significant impact to roles that performed traditional Build and Run tasks, staffing roles will change. Planning and commercial skills increase in importance. Role of the operations department also changes.

 

Tomorrow’s big opportunity awaits

The traditional approach to IT simply can’t deliver the speed and flexibility required for today’s speed of business. The best way to stay flexible for tomorrow’s big opportunity is to embrace open solutions. All these steps – and more – can support your IT department’s drive to digital transformation.

Cloud is more than a technology shift; instead, it’s a move towards a business outcome-based transformation. To enjoy the benefits of cloud, today’s IT must change its focus from maintaining systems to delivering services; from technology to outcomes.

Thanks to colleagues Kristen Leroux and Brian Franks for sharing their thoughts in shaping this blog.

Stay tuned for Part 2 of this blog, where I will share how long a legacy transformation typically takes, where most Canadian companies are along the path to cloud transformation, and the types of business benefits that are being realized.